Showdown at Eskom

By BusinessLIVE -
11 June 2018

Image:
Dean Hutton/Bloomberg

Eskom has dragged its regulator‚ the National Energy Regulator of SA (Nersa)‚ to court for a review of its tariff decision and is toughing it out against employees with a wage freeze‚ despite the growing prospect of a strike.

Nersa granted Eskom a 5.23% tariff increase for 2018/19‚ against the 19.9% that Eskom had applied for.

Businesses and the public opposed the increase that Eskom wanted‚ following the increases in tariffs of about 25% a year that Eskom was allowed five years ago when its financial position became critical.

Eskom ran out of cash late in 2017 after lenders turned off the taps due to state capture and corruption allegations.

The situation at the company remains dire‚ even though a turnaround strategy is on the cards.

The company has a huge debt burden of R350-billion‚ increasing by about R70-billion a year.

Eskom’s new management‚ headed by CEO Phakamani Hadebe‚ must cut costs‚ increase revenue and restructure debt if the company is to be sustainable into the future.

But steps to do so - such as its wage freeze - have angered trade unions‚ which are set to embark on an illegal strike‚ with a meeting between unions to iron out details scheduled for Monday.